by AmAdmin
posted on:Aug 14, 2014
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ITIN You will need to apply an individual taxpayer identification number. An ITIN can help you to fileUS tax return and get your payments. A request for an ITIN is made on Form W-7.
W-8 ECI: If property is used for rental purpose, the IRS requires foreign owner to withhold and pay income tax at a rate 30% of the gross rents collected. However, foreign owner can elect to treat the rental income as “effective connected income” withUS trade or business. The election is made on Form W-8 ECI, and submitted to the property manager. It is kept in the file, but not sent to the IRS.
State Sales & Tourist Development Tax If you rent your property for a period of less than 6 months, you will be required to collect and pay sales tax to the state. A commercial rental property is always required to collect & pay sales tax regardless rental periods.
Tangible Personal Property Tax Tangible personal property tax is based on the value of the personal property such as furnishing and appliances used in your rental property. An exempt of $25,000 is available. The return is due by April 1st.
Real Estate Tax The real estate tax is administrated by the county property appraiser. The tax is based on the annual assessment of the value of your property and land on January 1st. The tax bill is issued in November.
1040NR Tax Return If you rent your property out for more than14 days in any tax year, you are required to file a 1040NR with schedule E which details all income and expenses related to your rental property by the following April 15th. Each owner must file their own return. Even a couple who own a property, both of them must file their separate return, because there is no option to file a joint tax return for foreign taxpayer.
1031 Exchange Foreign investors are eligible for the 1031 exchange. When the exchange is made, gain is only recognized to the extent of money or other property is received. The basis of the new property is calculated each time an exchange occurs. In the end, only one gain is taxed.
Sale of Property When you sell yourUS property, the IRS requires the buyer to withhold 10% of the gross proceeds with respect to the purchase. This withholding requirement can be reduced or eliminated by applying for a withhold certificate from IRS with Form 8288-B.
Gain Exclusion From Sale of Principal Residence A taxpayer may exclude up to $250,000 ($500,000 if married filing jointly) of gain upon sale of a principal residence. You are allowed to claim this exclusion. However, you have to meet the requirement for the exclusion.
Estate Tax Estate tax is applied to the fair market value of US situs assets (including US real property) owned by a foreign investor at the time of death. A foreign investor is entitled to a $60,000 exemption.
